Thursday, April 15

budget 2019: Budget 2019: Govt wants banks to be profitable, efficient

Hours after India’s central bank eased operational curbs on three state-run lenders, interim finance minister Piyush Goyal told federal lawmakers during his budget speech Friday that he expects the eight remaining public sector financiers to also be out of the ambit of the prompt corrective action (PCA) framework soon.

Goyal’s comments came just a day after the Reserve Bank of India (RBI) lifted Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC) out of the purview of the framework, a move that would now allow the financiers to lend and open branches freely.

Various steps by the government have helped the banks, resulting in the easing of curbs on these three lenders, Goyal said while presenting the interim budget for 2019-20.

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However, the interim finance minister has not earmarked any capital outlay for public sector banks for the next fiscal ending March 2020. The government has infused a total of Rs 2.6 lakh crore of capital into public sector banks in the fiveyear period between 2014 and 2019, Goyal said.

The eight PSU banks still under PCA are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank. New Delhi wants the curbs removed to ensure greater credit availability, especially to small enterprises.

“The government’s sustained 4R strategy for banking transformation delivers again. Three better-performing PSBs (BoM, BoI & OBC) exit PCA. Banks need to be more responsible, adopt high underwriting & risk management standards to avoid recurrence,” financial services secretary Rajeev Kumar tweeted last evening.

The 4R approach Kumar tweeted about pertains to recognition, resolution, re-capitalisation and reforms, prudential norms that also found a mention in Goyal’s budget speech on Friday.

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